The average fixed mortgage interest rates in the United States fell over the past week, according to figures released Thursday by government-backed mortgage giant Freddie Mac.
The average 30-year fixed mortgage rates fell 0.05 percent to 4.32 percent from last week's rate of 4.37 percent. The average 15-year fixed interest rates also dropped to 3.32 percent from the 3.38 percent recorded last week, The Associated Press reports.
Officials attribute the slump in rates to the declining housing starts.
"Mortgage rates eased this week as housing starts declined 0.2 percent in February to a seasonally adjusted annual rate of 907,000, below consensus forecast," Frank E. Nothaft, vice president and chief economist at Freddie Mac, said in an official statement.
The U.S. Commerce Department revealed Tuesday that new home construction fell 0.2 percent to a seasonally adjusted 907,000. The slight drop could have been due to the cold winter. But the pace of construction and building permits surpassed forecasts, advancing 7.7 percent in the same period, according to The Wall Street Journal.
Experts speculate that the drop in mortgage rates could be a temporary change and they could shoot up in the coming months, especially after the Fed announced its decision to end its bond-buying program by the end of this year and raise interest rates.
"The rate on the 10-year Treasury note rose following the Fed's announcement Wednesday afternoon and, if this holds, interest rates may begin to trend higher going into next week," Nothaft added.
In a meeting held Wednesday, Yellen said the Fed would go ahead with its third round of slashing its bond-buying scheme and would wait a "considerable time" before hiking short-term interest rates. The Fed also added that they would now use a combination of inflation and employment indicators to go ahead with the decision of raising interest rates, reports USA Today.
The Fed has kept interest rates near zero since the housing market crashed in 2008. Industry specialists are expecting the first interest hike to come in by 2015.
"That still puts us in mid-2015, which isn't much of a surprise," John Lonski, team managing director at Moody's Analytics, told the publication.
